Xbox One has been the target of much criticism and online angst since Microsoft Corp. announced its next-generation console in May.

Critics have spoken out loudly regarding the Xbox One’s Internet connectivity requirements, secondary market restrictions, and mandatory Kinect sensor. The most recent addition to this growing list of concerns is the system’s just-announced — and surprisingly stiff — $499 price tag, which makes it $100 more expensive than Sony Corp.’s competing PlayStation 4.

Post Arcade sat down with Xbox Canada’s Craig Flannagan at the Electronic Entertainment Exhibition in Los Angeles Wednesday with an aim to discern the rationale behind some of the company’s controversial strategies and decisions as pertains to the next generation of gaming.

Post Arcade: What do you think Microsoft had to do at E3 this year?

Craig Flanagan: What we told people and what we did was show that Xbox One is going to be the best place to play games. On Xbox One games will come alive. What we did was show 17 new exclusives, 10 of which are brand new IPs. We brought the games. We started with Metal Gear Solid, ended with Titanfall, and in the middle teased Halo, showed Forza 5, Dead Rising 3, Battlefield, and Ryse: Son of Rome. It was just a great show for games.

PA: I’ve heard a lot about Xbox One’s cloud processing potential. One of the things I haven’t learned, though, is what happens when you’re playing a game being processed in the cloud and you lose your Internet connection.

CF: There’s going to be a lot more to come on this. We’re two days into telling our game story. We’ve developed Xbox One with intermittent connectivity in mind. And how that plays out we’re going to see in the coming weeks and months as we lead into launch. There’s still a lot for us to show.

PA: Does Microsoft have a clear description set out for the way Xbox One will deal with used, lent, and rented games?

CF: We do support those things, all of which I would categorize as falling into the secondary market. We do support the secondary market. The best place to go to see details on that right now is Xbox Wire News at Xbox.com. I’d just tell you the same things it says there. We’ll have more to share as we get closer to launch.

[Editor’s note: You can visit the referenced article here. It states that Xbox One owners may give a game to a friend who has been on their friends list for at least 30 days, but they can only do this once. Loaning and renting games will not be available at launch. Also: Publishers have been given the power to set up “transfer fees” for used games with retailers.]

PA: Given the announcements at Sony’s E3 press conference regarding its [more lenient] game ownership, rental, and lending policies, do you think Microsoft will revisit its policies for the secondary market?

CF: What we’ve always thought is that this is about introducing Xbox One as something that is all-in-one entertainment. We’re really focused on that vision. So you’re going to see us continue to push and showcase and develop games that come alive and aren’t available anywhere else. And the TV experience, and movies, and music, and sports, and Skype, and the web, and the ability to multitask, and to snap and instantly switch between those experiences with your voice and controller. We’re pretty excited right now with how things are going.

PA: For the first time an Xbox is the priciest console among the Big Three. How do you plan to tackle this challenge?

CF: We are absolutely the best value in entertainment right now. Look at the games we’ll be able to deliver that no one else will, and everything you get in Xbox One. Every Xbox One comes with Kinect, every Xbox One is giving you games that are alive and living worlds. The benefits of cloud processing and access to the cloud. Plus all of the advances we’re making in Xbox Live. We’ve got Game DVR and Upload Studio and access to Twitch TV at a platform level. There’s games with Xbox Live Gold so you get games with your Xbox Live subscription. And the fact that your Xbox subscription is going to work against Xbox 360 and Xbox One, and your gamer tags and gamer scores will persist. That’s a lot of value.

PA: Is the premium price compared to that of your competitor due primarily to Kinect, a sophisticated and presumably expensive extra technology that’s bundled with every Xbox One console?

CF: No. I wouldn’t say it separates out that clearly or easily. Again, the value that we’ve got in this console – because price is only part of the equation – the value we’ve got in this console is the best in the industry. We’re really confident as we step back and see not only what we’re able to offer today but the longevity and what we’ll be able to offer in the future, for the next decade of entertainment. It feels really good.

PA: How would you respond to gamers who say they aren’t interested in Kinect, who feel like they’re going to be forced into paying for extra technology they don’t want?

CF: We’ve always been about incredible games. Games are in our DNA. I think the message to gamers is that with the show we put on Monday and the platform we’re delivering they will be able to play the best games in the industry. There will be no better place to play games than Xbox One.

Furthermore, as you look at the all-in-one entertainment aspect, we know how people are using Xbox 360 right now. The majority of traffic and the majority of usage is apps. It’s the entertainment side of the console. We know that people buy it for games, but how they use it is different than that. This is going to be one of those things that as gamers and consumers discover just how great the new Kinect is it will be a little bit of a game changer. People will realize how empowering it is to be able to just walk into the living room and say “Xbox on” and things happen. You’ve got your voice and gesture and controller controlling your entire entertainment system.

PA: Since we’re segueing into the all-in-one experience, where are you in terms of dealing with Canadian broadcasters and content providers to bring the experience Microsoft has described to Canadians?

CF: We are absolutely focused on delivering what we showed in May at the reveal event around a premium TV experience in Canada, and every other country Xbox One is in. But Canada is driving pretty hard. We’ll have updates shortly. It’s something that we’re pretty focused on. It’s a really important part of the platform.

PA: But you’re not ready yet to talk about specific agreements?

CF: No.

PA: Theoretically, if Microsoft doesn’t reach agreements with companies like Rogers, what would the Xbox One TV experience be like in Canada?

CF: Tough for me to speculate right now. What we’re focused on right now is delivering a premium TV experience, premium movie experience, premium games experience, music and sports. This is going to be the one and most important device you have in the living room, and it’s going to pull the whole family in. It really is.